tv Nightly Business Report PBS October 11, 2012 4:30pm-5:00pm PDT
inexpensive picture hook can secure pictures to the wall and help keep you and your family safe. for more information on earthquake preparedness, >> this is nbr. captioning sponsored by wpbt >> susie: good evening, everyone. i'm susie gharib. tom's off tonight. joe biden and paul ryan are in danville, kentucky, for tonight's vice-presidential debate. we look at what to expect in this high stakes faceoff. sprint goes from buyer to seller. we'll tell you who's taking an interest in the nation's third largest mobile carrier. and halloween is just around the corner, but retailers already have their eyes on the big prize-- christmas. and this year, playing santa could be just a click away.
that and more tonight on nbr! another big debate tonight, this time between joe biden and paul ryan. the vice-presidential candidates will slug it out on the economy, medicare and taxes. they may be number two on the ticket, but these men hope they can make this another crucial turning point in an election that is now almost a dd heat darren gersh reports. >> reporter: vice-presidential debates are often more entertaining than important, but not this time. joe biden will be trying to beat back the romney bump from the first presidential debate; and paul ryan will be working to stretch mitt romney's debate double into a home run. >> if ryan does really, really well, it could possibly fundamentally make this a real horse race, not just nationally but in the battleground states. so, i think there is a lot of expectation on both sides for what this debate possible could do. >> reporter: if you thought the first presidential debate was bogg down in stastics and policy details, you'll have more fun tonight. debate veterans are expecting fireworks.
jeff nesbit was press secretary for former vice-president dan quayle. >> while both of them can go deep on wonky politics-- biden can go pretty deep on foreign policy and ryan can go pretty deep on economic policy-- i don't expect that at all in this debate. vice-presidential debates basically are two attack dogs going at each other to defend and promote the top of the ticket. >> reporter: once again, medicare will likely be the star of the show. many democrats were disappointed president obama didn't take governor romney on in their debate, so democrats are looking to biden to do a lot of fact- checking. >> since ryan is the author of the ryan budget that would, as some believe, end medicare as we know it and create a voucher program, it's just hard to imagine that biden isn't going to come back to it over and over and over again. >> reporter: ryan will be defending his economic plan and mitt romney while also focusing fire on the president. it's a challenging assignment for the 42-year old congressman who is stepping into the national spotlight for the first time.
and expectations are very high. >> if he does a good job, even if the ticket doesn't prevail, then he has a bright future in national politics. he may even be the standard bearer for the republicans in 2016. >> reporter: so if you want to get an early start on the next election, watch tonight for a glimpse of the political and policy debates you may be seeing four years from now. darren gersh, nbr, washington. >> susie: a big focus in tonight's debate-- jobs. and today, some encouraging news on the jobs front. a big drop in the number of new claims for jobless benefits, down 30,000 to 339,000 new claims. still, on wall street, stocks struggled to gain ground-- the dow fell 18 points, the nasdaq lost two points, but the s&p rose a fraction. one stock getting a lot of buzz here on wall street today-- sprint. its shares surged almost 15% after the mobile carrier said it was in talks with japan's softbank. those negotiations could lead to
the japanese tech giant taking a major stake in sprint. sprint may have a savior-- it could use help and money from softbank. sprint has been struggling for seven years-- a disastrous merger with nextel, and an expensive tab to modernize its wireless network. but sprint insisted today its talks with softbank are in the early stages. "although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of sprint." reportedly, softbank would invest nearly $13 billion for a majority stake in sprint. that could go a long way to help sprint compete with rivals at&t and verizon, and pay for its investment in mobile broadband provider clearwire. >> i think the one piece of the puzzle with sprint that was always a little worrisome was their investment in clearwire. so to the extent that helps bolster clearwire, could make sprint an even better investment, but we'll have to
see how this encapsulates clearwire, if it does at all. >> susie: michael bowen of pacific crest securities has been following this closely and joins us now. >> susie: is this a good deal if it happens for sprint? >> it's definitely a good deal for sprint because it would alleviate a lot of pleasure on their balance sheet. and that would help them compete against the two top carriers, verizon and at&t more effectively. >> well, let's talk about that a little bit. you know, sprint has been struggling on the competitive landscape. will it be in a better position to compete with verizon and at&t? will how will softbank help its competitive dynamic? >> well, i think first and foremost it would help from a competitive standpoint but i will stress this, that in the past sprint as you mentioned has had some difficulties with regard to some of the integrations
they've gone through. recently though dan and the team have done a very good job with network vision and also starting to shut down the network, planning to get out of the network by mid 2013. so before any of this came to be, we had said that we thought sprint would be worth about 6.5 dollars that is before softbank wld come in and potentially take 70% of the company as an investment for nearly $13 --13 billion as you mentioned. and sprint right now has over 21 billion in debt, they have 14.5 billion of net debt. so that type of investment would free up their balance sheet to do things such as increase their holdings. and while sprint said they have ample spectrum since the beginning of 2014 as i'm sure you and everybody else understands, spectrum is a scarce commodity at this point. >> susie: right. >> and will continue to be so particularly since the scc while they said they will continue to get more auctions out in the next two
years of 300 gigahertz it will take 2 to 3 years to have that occur. right now this would allow them to invest. >> susie: but let's just say that this deal doesn't go through. because it's in the preliminary stages. can sprint go-it-alone and what is plan b? >> well, they can go-it-alone. and so a, yes they can go-it-alone. i think it's worth 6.5, if they go-it-alone, then we have said that they may go afr metro pcs which t-mobile has made a bid for as well. >> susie: so as you look at -- >> and that would allow them to gain spectrum as well. >> susie: all right. as you look at the stocks in this space, at&t, verizon, sprint, who are the winners, who are the losers, what are you recommending? >> well, right now we're definitely recommending sprint. we like verizon quite a bit. they're in a very good position right now. they have a lot of momentum with iphone.
and then you know, the jury is out on metro pcs right now. it's going up and down depending on what we are hearing out of the news. we think those shares are worth about $11.28. but it really depends if sprint comes back and potentially makes a counteroffer. >> all right, a fluid situation. any disclosures to make. dow own any of these stocks are you doing business with them? >> no, i do not. >> susie: okay, michael bowen, senior equity analyst at pacific crest security. thanks a lot for coming on the program. still ahead-- how the smart- phone and "showrooming" are changing holiday shopping habi. more than two years after b.p.'s rig explosion in the gulf of mexico, a layer of oil is floating in the spill area. the u.s. coast guard today said oil samples match b.p.'s macando well, and the oil giant says the sheen likely came from a bent pipe under the surface. lawmakers are calling for an inspection, but federal
officials say they don't think the oil will make it to shore. two years ago, the transocean- owned and british petroleum- operat "dewatehorizon" rig exploded, killing 11 people and causing the worst offshore oil spill in u.s. history. weaker than expected demand-- that's what advanced micro devices said tonight as it cut third-quarter revenue estimates. the computer chip maker says a sluggish global economy is hurting sales across all product lines. amd now sees revenues falling
10% to around $1.3 billion. the shares ended the regular trading session up slightly at $3.20 a share. for the year, they're down 41%, and in after-hours trading tonight, they fell below $3. the a.m.d. warni comes as we see personal computer sales in a nosedive. two research firms are out with new data showing p.c. shipments in the latest quarter fell more than 8% from a year ago. that's the steepest drop in a decade. is it because consumers and businesses simply are holding off buying computers until the launch of windows 8 later this month, or are desktops becoming obsolete? erika miller reports. >> i use my phone for pretty much everything-- work; talking to family, you know, around the world; facebook, of course; twitter, social media, things like that. >> reporter: sound familiar? we americans love our smart phones and tablets, and we're spending a lot less time tethered to the personal computers on our desks. >> i spend more time on my phone than i actually do on my home
computer, because i'm hardly ever home. it's helped me a lot be able to be more connected to family and business. >> reporter: according to research firms gartner and idc, global p.c. shipments shrank over 8% in the third quarter. that's the normally strong back- to-school period. another firm, s isuppli, warns shipnts of p.c for the year as a whole could fall for the first time since the dot-com bust of 2001. 2012 has not gone the way the p.c. industry had hoped. at the beginning of the year, intel predicted ultra-books would reboot p.c. sales. but that hasn't happened. they lack the buzz of ipads, and they're also more expensive. >> i think price makes a big difference here. if we see those ultra-books really coming down to the budget prices, to the $400 or $500 range, we might see some change. >> reporter: so it'so surprise p.c.-related shares have gotten hit hard this year.
intel has fallen 10%, but that's nothing compared to the drop in rival advanced micro devices, as well as big hits to p.c. makers dell and h.p. the question now is whether microsoft's new windows 8 will usher in a new p.c. revolution when it comes out later this month. >> with that new operating system, we are going to see some interesting new twists on design in laptops. we are going to see some laptops that have touch screens. >> reporter: and it's important to remember that even in the weak third quarter, sales of ipads were trounced by p.c.s five to one. >> i don't think they are completely going away. first of all, you have the need for a keyboard that's a full- size keyboard. people are not just having fun on their computers now; they're still doing a lot of work on them. >> reporter: for many of us, its it's hard to imagine the p.c. disappearing, but for others, that day has already come. >> i never use my home computer.
>> i've been using my phone a lot mo than my laptop. just because i can do all the stuff on my laptop on my phone. >> reporter: erika miller, nbr, new york >> susie: whether you use a laptop or a smart phone, more and more consumers plan to do their holiday shopping online. the national retail federation says internet sales will be up 15% this year. as diane eastabrook reports, new technology is making it easier to play santa. >> reporter: there are just 74 shopping days left until christmas. >> it needs to go back a little. >> reporter: retailers like macy's are decking the halls, hoping to lure in shoppers. but this year, it may take more than fancy window dressing. growth in online sales is expected to far outpace overall industry growth this holiday season. experts say part of the reason is internet retailers are getting a lot better at what the they do. >> the sites are easy to navigate, they got the right
selection of products, the pricing is sharp, they process the order, they get you the goods. >> reporter: technology is the other reason. the proliferation of tablet computers and smart phones make it easier for consumers to shop online and price-compare anytime, anywhere. with smart phones comprising roughly half of all mobile phones, experts expect to see more "showrooming" this year. that's when shoppers visit a store, scan an item for a price, then purchase it online for less. >> you've got about a third of the online population now saying they are doing that particular activity, and if there is a price advantage online-- which there often is-- a retailer could find themselves competing with amazon, let's say, in their own store. >> reporter: fulgoni also thinks social media will play a much larger role in the coming holiday shopping season. sites like facebook and pinterest let consumers "like" retailers and even share pictures of products they recommend. >> when you see a friend saying something positively about a brand, it's likely to have a lot more persuasion... persuasive
impact on you than if that message came directly from the brand. >> reporter: the social media site fancy goes a step further, letting consumers buy on the site. experts say even though technology makes it easier to shop online, the lowest prices will ultimately win over consumers, whether they find them here or here. diane eastabrook, nbr, chicago. >> susie: tomorrow, we look at how the presidential election is affecting holiday retail. housing has been a bright spot in an otherwise dull recovery, and home builder stocks have
outpaced the broader market this year, racking up solid gains. but just one day after the federal reserve noted "widespread improvement" in housing, a top analyst says it's time to take profits in the sector. housing analyst megan mcgrath said it was that same fed report that changed her bullish stance on the homebuilders. >> we did read the beige book, and actually when we looked into it... into the details, into the markets where homebuilders build, the data actually... the commentary was not as positive as it was in the last beige book. >> susie: mcgrath believes new home sales will continue to grow into 2013, but she's concerned the pace of growth will slow in the months ahead. that's why she cut her ratings on homebuilders: ryland is now a "sell," d.r. horton and lennar from "buy" to "neutral," but she boosted her outlook on hovnanian from "sell" to "neutral." all of those stocks are up 60% or more year to date, but they
lost 2% or more today on profit- taking. citigroup says the recovery in the housing market and more action from the fed to stimulate the economy will help stocks move higher, even if corporate profits dip. the bank now expects u.s. stocks to outperform other markets around the world through next year right now, the s&p is above 1,400. citigroup analysts say the index could hit 1615 by the end of next year. that would be up 13% from where it's at now. high on citigrp's buy list-- aetna, csx, goldman sachs, and google. shares of safeway bagged a loss. it's third quarter earnings met profit expectations but sales declined. analysts say grocery store chains like safeway are finding it challenging to compete against big-box retailers. >> as long as household budgets continue to be constrained, consumers are going to look for the cheapest prices, and the cheapest prices are still at the walmarts and costcos, and it's going to be very difficult for them to compete.
>> susie: shares of safeway ended down 3.5%. dollar tree is also blaming the cost-conscious consumer for its profit warning. the discount retailer says third quarter results will come in below earlier estimates because consumers aren't spending as much. it also blames higher gas prices. shares of dollar tree slid nearly 8%. rivals family dollar and dollar general posted more modest declines. ruby tuesday also getting hit by a slowdown in consumers eating out. the restaurant chain posted quarterly earnings which matched wall street expectations. but looking ahead, it issued a wnbeat growth outlook for the year. ruby tuesday rose a fraction. shares of "the new york times" company were up strongly on the back of some positive comments from wall street analysts. barclays says the online pay per view programs put in place at "the new york times" and "boston globe" are now gaining enough traction to offset the decline in print advertising sales.
shares of new york times were up almost 4%. a busy day for initial public offerings. a quartet of companies made thr tring debut-- realogy, shutterstock, kythera pharmaceuticals, and intercept pharmaceuticals posting decent gains of 20% or better. oil trimmed some of its gains in the session after a government report showed a slightly higher than expected increase in u.s. supplies last week. it ended back above $92 a barrel. heating oil and natural gas futures rallied. the same government report also forecast a rise in spending for winter heating fuels. heating oil is at a six-month high, and natural gas prices are at new highs for the year. those rising prices are making coal look more attractive. peabody and consol energy rose at least 8%. alpha natural and arch coal were up even stronger. looking ahead to tomorrow, j.p. morgan and wells fargo will report third quarter results before the opening bell. shares of j.p. morgan moved
slightly higher on word that the bank's c.f.o. will step down and move into a different position. j.p. morgan is expected to post profits of $1.21 a share; that's 19 cents above last year's numbers. wells fargo is expected to earn 87 cents a share; that's 15 cents better than the same period last year. and finally, we see the powershares qqq's was the lone loser among most actively traded e.t.f.s. and that's tonight's "market focus." the size and success of big banks like j.p. morgan are back in the spotlight. a top federal reserve policymaker is calling on congress to cap the size of big banks. those comments yesterday by dan tarullo, the fed's point man on banking regulation, is being debated from walstre to washinon. joining us, a man who worked in the u.s. treasury on banking reform. morgan ricks is now assistant professor of law at vanderbilt university.
more-- morgan w what do you think here, should the government cap the size of big bank, this is turning out to be a very controversial topic, once again. >> yes, it is. and dan tarullo is one of the best thinkers we have on these issues. so when he speaks we should all listen carefully. on this question, though, i would respectfully take a slightly different view. and one way of thinking about this is during the financial crisis in late 2008, when lehman brothers failed we all remember it almost brought down the whole financial system. lehman brothers was a fairly small firm. at least compared to the giant financial firms we have today including jp pore began, bank of america, citigroup and so on. jpmorgan, those three groups vq size of the sizf lehman brothers before it went bankrupt. and this suggests that maybe size isn't the characteristic we ought to be targeting.
>> and so what are you saying? >> don't cap the size, what's the alternative if one ask concerned about this too big to fail issue. >> yeah, well, i mean there are some alternatives. one is the alternative that was embodied in the dodd frank act. and was's called the liquidation authority or 9 resolution authority for financial firms. which is designed to be a way to really put them out of existence no matter how big they are without having systemic consequences on the system. now a lot of people, myself included, are concerned that the way that particular authority was designed might not be as effective as we would want it to be. but that sort of approach is a different approach from what mr. tarullo is suggesting. >> right, but that's in crisis mode, bank gets into crisis mode. what tarullo is talking about is ahead of that, just put a cap on it. what dow say to critics who say, this is a threat to the
u.s. financial system. we need big banks to be competitive with international commerce and on the global scene what do you say to that? >> yeah, well, to be clear in tarullo's speech, the reason he warrants to cap size is because when they fail they have terrible consequences unless they're small. and my point is even if they are the size of lehman brothers they may have a problem. but i'm-- i am partially sympathetic to wall street's point of view on this also. which is that they need to be reasonably large in order to compete with large international firms. there's some dispute in the academic literature about whether size really brings a lot of benefits. but the financial sector certainly says it does. if it's the case that size isn't the real problem, but the consequences of failure is the real problem, then i would suggest maybe there's other ways to think about dealing with it. >> all right. this is an issues that's not going away, morgan. thank you so much for coming on the program, morgan risk of vanderbilt university.
coming up tomorrow on nbr, our friday "market monitor" guest says 2013 will be a year of revitalization for the u.s. and emerging markets. he's jim paulsen of wells capital management. as we continue our look at the coming holiday retail season, this is the time of year retailers see a lot of green, but many parents are seeing red. in tonight's "kids & cash," getting your kids ready for realistic holiday spending. here's neale godfrey with the children's financial network. >> have you noticed that while
you are looking for halloween pumpkins, retailers are already bombarding you with ho-ho-ho for christmas? did i sleep through thanksgiving? financially planning ahead is good, but let's put the joy back into the holidays and take the debt out! here are some easy steps: n't gonto de because of poor planning-- make a list and check it twice. step away from the credit cards- - if you can't pay the bill in full at the end of the month, don't charge it. gift exchange should not be an olympic competition-- more expensive is not better. set limits for gifts and explain to your kids that gifts should say "i care." give of yourself by giving to charity and volunteering with your kids. have kids think of non-monetary gifts, as well. happy holidays. i'm nee godfrey. >> susie: and finally tonight, wendy gets a makeover. fast food's favorite redhead is getting a contemporary look, but
she still has her signature pigtails. but it's not just the logo that's getting a new look-- wendy's customers will soon find high-definition tvs, fireplaces, digital menu boards, and wi-fi. the ohio-based company says it's making the changes to improve the customer experience. the changes should roll out this spring. that's "nightly business report" for thursday, october 11. have a great evening, everyone. we'll see yoonline at nbr.com, and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org
>> susie: i'm susie gharib with an nbr news brief. sprint shares surged almost 15% after the mobile carrier said it was in talks with japan's softbank. those negotiations could lead to the japanese tech giant taking a major stake in america's third largest cell company. on wall street, stocks struggled to gain ground-- the dow fell 18 points, the nasdaq lost two points, but the s&p rose a fraction. advanced micro devices tonight cutting its third-quarter revenue estimates by 10%. it blames the sluggish global economy for weak sales across all of its product lines.